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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 5, 2005
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ENZON PHARMACEUTICALS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-12957 22-2372868
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(State or other (Commission (IRS Identification No.)
jurisdiction of incorporation) file Number)
685 Route 202/206, Bridgewater, New Jersey 08807
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (908) 541-8600
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[_] Written communication pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[_] Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b)
[_] Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On May 5, 2005, we issued a press release to report our results of operations
and financial condition for the quarter ended March 31, 2005. A copy of this
press release is included as Exhibit 99.1 to this Form 8-K and is incorporated
by reference into this Item 2.02.
The information in this Item 2.02, including Exhibit 99.1, is being furnished
and shall not be deemed to be "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the
liability of that Section, nor shall such information be deemed to be
incorporated by reference in any registration statement or other document filed
under the Securities Act of 1933 or the Exchange Act, except as otherwise stated
in such filing.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
99.1 Press Release dated May 5, 2005
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: May 5, 2005
By: /s/ Craig Tooman
---------------------------------
Craig A. Tooman
Executive Vice President,
Strategic Planning
and Corporate Communications
3
Exhibit 99.1
Enzon Reports Third Quarter Results
BRIDGEWATER, N.J.--(BUSINESS WIRE)--May 5, 2005--Enzon
Pharmaceuticals, Inc. (Nasdaq:ENZN) today announced its financial
results for the quarter ended March 31, 2005, the third quarter of
Enzon's fiscal year (FY) 2005. On a reported basis, calculated in
accordance with U.S. generally accepted accounting principles (GAAP),
Enzon reported a net loss of $4.6 million or $0.11 per diluted share
for the third quarter of FY 2005, which includes a pre-tax charge of
$5.0 million related to the termination of the Company's agreement
with Inex Pharmaceuticals Corporation (TSX: IEX). This compares to net
income of $5.1 million or $0.12 cents per diluted share for the third
quarter of FY 2004. Enzon's financial results for the third quarter of
FY 2005 were also negatively impacted by a decline from the prior year
in ABELCET sales due to the previously reported increasingly
competitive market conditions in the intravenous antifungal market.
The Company's financial results for the third quarter of FY 2005 were
favorably impacted by increases in sales of Enzon's other three
marketed products, ADAGEN, ONCASPAR, and DEPOCYT, as well as increased
royalties due to Schering-Plough's launch of PEG-INTRON in Japan.
"Since assuming leadership of Enzon in late 2004, I have been
conducting an in-depth review of the Company's operations," said
Jeffrey H. Buchalter, chairman and chief executive officer. "Despite
recent challenges facing our business, I am growing increasingly
confident in the potential of our existing assets and I look forward
to leading Enzon as we position this company into one that is
well-equipped for long-term sustainable success."
As previously mentioned, Enzon's net loss for the third quarter of
FY 2005 includes a pre-tax charge of $5.0 million, which pertains to a
final payment made to Inex under an agreement to terminate the
companies' partnership for the development and commercialization of
MARQIBO(R) (vincristine sulfate liposomes injection). This payment has
been included in the Company's research and development expenses for
the third quarter of FY 2005.
Adjusted Financial Results
On an adjusted basis, the Company reported an adjusted net loss of
$1.4 million or $0.03 per diluted share for the third quarter of FY
2005, versus an adjusted net loss of $3.0 million or $0.07 per diluted
share for the third quarter of FY 2004. Enzon's adjusted financial
results exclude non-operating income and expenses related to
investment activities that are outside of the Company's normal course
of business. For the third quarters of FY 2005 and FY 2004, Enzon's
adjusted net loss and adjusted net loss per diluted share exclude
expenses related to a financial instrument that the Company formed to
reduce its investment risk associated with 1.5 million shares of NPS
Pharmaceuticals Inc. (Nasdaq: NPSP) common stock. Enzon received the
NPS common stock in accordance with a June 2003 merger termination
agreement between Enzon and NPS. The Company's adjusted financial
results for the third quarter of FY 2004 also exclude investment
income of $11.0 million related to the sale of a portion of the
Company's investment in Nektar Therapeutics during that quarter.
Enzon has reported adjusted net income because the Company
believes it is representative of the underlying operations of its
business and is relevant to gaining an understanding of the Company's
trends and potential future performance. A table reconciling the
Company's adjusted financial results to its financial results
calculated in accordance with GAAP for the third quarters of FY 2005
and FY 2004 has been included later in this release.
Revenues
Combined product sales for the Company's four internally marketed
products (ABELCET, ADAGEN, DEPOCYT, and ONCASPAR) decreased to $21.2
million for the third quarter of FY 2005, as compared to $28.0 million
for the third quarter of FY 2004. The decrease in product sales was
attributable to a decline in North American sales of the Company's
intravenous antifungal product, ABELCET. ABELCET sales were impacted
by increasingly competitive conditions in the intravenous antifungal
market. For the third quarter of FY 2005, sales of ABELCET were $9.1
million compared to $17.6 million for the third quarter of FY 2004.
The decrease in ABELCET sales was partially offset by increased sales
for each of the Company's other three internally marketed products for
the third quarter of FY 2005 versus the third quarter of FY 2004.
Sales of ADAGEN, an enzyme replacement therapy used to treat a
type of severe combined immunodeficiency disease, increased to $4.8
million for the third quarter of FY 2005, as compared to $4.1 million
for the third quarter of FY 2004. Historically, quarterly sales of
ADAGEN experience volatility because of the small number of patients
on therapy.
Sales of ONCASPAR, which is used in combination with other
chemotherapeutics to treat acute lymphoblastic leukemia, increased to
$5.5 million for the third quarter of FY 2005, as compared to $4.9
million for the third quarter of FY 2004.
Sales of DEPOCYT, which is used for the treatment of lymphomatous
meningitis, increased to $1.8 million for the third quarter of FY
2005, as compared to $1.4 million for the third quarter of FY 2004.
Royalties for the third quarter of FY 2005, increased to $12.7
million, as compared to $11.1 million for the third quarter of FY
2004. Royalties are principally comprised of royalties from sales of
PEG-INTRON, which is marketed by Schering-Plough Corporation (NYSE:
SGP) for the treatment of chronic hepatitis C. The increase in
royalties was primarily driven by higher sales of PEG-INTRON as a
result of the December 2004 launch of PEG-INTRON combination therapy
in Japan.
Research and Development
The Company's research and development expenses increased to $12.9
million in the third quarter of FY 2005, as compared to $10.8 million
for the third quarter of FY 2004. This increase was attributable to
costs related to MARQIBO, including the previously reported payment
made to Inex under an agreement to terminate the companies'
partnership. The increase in costs related to MARQIBO was partially
offset by a decline in costs related to Pegamotecan, which the Company
discontinued its development program for in February 2005, as well as
a decrease in costs related to other preclinical projects.
Selling, General and Administrative (SG&A)
Selling, general and administrative expenses increased to $13.7
million in the third quarter of FY 2005, as compared to $12.5 million
for the third quarter of FY 2004. This increase was primarily due to
increased sales and marketing expenditures in our oncology business,
as well as certain costs related to MARQIBO.
In-Process Research and Development
In-process research and development was $12.0 million for the
three months ended March 31, 2004 due to an up-front payment, which
the Company made in January 2004 for the execution of an agreement
with Inex for the development and commercialization of MARQIBO. As
previously reported, in January 2005, Enzon terminated its agreement
with Inex.
Net Investment Income
Net investment income decreased to $1.1 million for the third
quarter of FY 2005 compared with $11.6 million for the third quarter
of FY 2004. The decrease is principally due to the prior year's
reported sale of 880,075 shares of Nektar Therapeutics common stock,
which resulted in a net gain of approximately $11.0 million.
Cash and Investments
The Company's total cash reserves, which include cash, cash
equivalents, and marketable securities, totaled $210.0 million as of
March 31, 2005 compared with $186.2 million as of June 30, 2004.
During the quarter ended March 31, 2005, the Company received cash
proceeds of $7.5 million related to the sale of 375,000 shares of NPS
common stock, which were received as part of the merger termination
agreement discussed earlier in this release.
Reconciliation of GAAP net (loss) income to adjusted net loss
The following table reconciles the Company's GAAP net (loss)
income and income (loss) per diluted share to its adjusted net loss
and net loss per diluted share for the three months ended March 31,
2005 and 2004:
Three Months Ended
(in thousands, except per share
amounts)
---------------------------------
03/31/05 03/31/04
---------------------------------
Net Net loss Net Net
loss per income income
diluted (loss) (loss)
share per
diluted
share
---------------------------------
GAAP net (loss) income ($4,577) ($0.11) $5,066 $0.12
Less:
Net realized loss related to the
sale of NPS common stock, net of
tax(1) (2,020) (0.05) -- --
Unrealized (loss) gain related to
financial instrument, net of tax(2) (1,206) (0.03) 226 0.01
Investment income related to the
sale of Nektar Therapeutics common
stock, net of tax(3) -- -- 7,794 0.18
---------------- ----------------
Adjusted net loss ($1,351) ($0.03) ($2,954) ($0.07)
================ ================
(1)The Company's adjusted net loss and adjusted net loss per
diluted share for the third quarter of FY 2005 exclude net realized
losses related to the sale of shares of NPS common stock totaling $2.0
million. As of March 31, 2005 the Company holds 750,000 shares of NPS
common stock.
(2)The Company's adjusted financial results for the third quarters
of FY 2005 and FY 2004 exclude an unrealized loss of $1.2 million and
an unrealized gain of $226,000, respectively, related to a financial
instrument the Company formed to reduce its investment risk associated
with 1.5 million shares of NPS common stock received in June 2003. The
Company received the common stock under a merger termination agreement
with NPS.
(3)The Company's adjusted financial results for the third quarter
of FY 2004 exclude a gain related to the sale of 880,075 shares of
Nektar Therapeutics common stock.
Adjusted net (loss) income and adjusted net (loss) income per
diluted share, as Enzon defines it, may differ from similarly named
measures used by other entities, and consequently, could be misleading
unless all entities calculate and define adjusted net income in the
same manner.
Conference Call and Webcast
Jeffrey H. Buchalter will be hosting a conference call today, May
5, 2005 at approximately 10:00 a.m. EDT. All interested parties may
access the call by using the following information:
Domestic Dial-In Number: 877-777-1972
International Dial-In Number: 612-288-0340
Access Code: 778947
Enzon's conference call will also be webcast in a "listen only"
mode via the Internet at http://www.vcall.com. Additionally, for those
parties unable to listen at the time of Enzon's conference call, a
rebroadcast will be available following the call from Thursday, May 5,
2005 at approximately 3:15 p.m. EDT. This rebroadcast will end on
Thursday, May 12, 2005 at 11:59 p.m. EDT. The rebroadcast may be
accessed using the following information:
Domestic Dial-In Number: 800-475-6701
International Dial-In Number: 320-365-3844
Access Code 778947
About Enzon
Enzon Pharmaceuticals, Inc. is a biopharmaceutical company
dedicated to the development and commercialization of therapeutics to
treat life-threatening diseases. The Company has developed or acquired
a number of marketed products, including PEG-INTRON(R), marketed by
Schering-Plough, and ABELCET(R), ONCASPAR(R), ADAGEN(R), and
DEPOCYT(R), marketed in North America by Enzon's specialized sales
force. Enzon's science-driven strategy includes an extensive drug
development program that leverages the Company's macromolecular
engineering technology platforms, including PEG modification and
single-chain antibody (SCA(R)) technologies. Internal research and
development efforts are complemented by strategic transactions that
provide access to additional marketed products and promising clinical
compounds. Enzon has several drug candidates in various stages of
development, independently and with partners. Further information
about Enzon and this press release can be found on the Company's web
site at www.enzon.com.
There are forward-looking statements contained herein that are not
based on historical fact, including without limitation statements
containing the words "believes," "may," "plans," "will," "estimate,"
"continue," "anticipates," "intends," "expects," and similar
expressions. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause actual results,
events or developments to be materially different from the future
results, events or developments discussed above. Such factors include
the risk that PEG-INTRON may not continue to be successfully marketed
in Japan, as well as those described in Enzon's Form 10-K/A and Forms
10-Q on file with the SEC. These factors should be considered
carefully and readers are cautioned not to place undue reliance on
such forward-looking statements. All information in this press release
is as of May 5, 2005 and the Company undertakes no duty to update this
information.
Enzon Pharmaceuticals, Inc. and Subsidiaries
Consolidated Statements of Operations
Three Months ended March 31, 2005 and March 31, 2004
Dollars in Thousands (except per share amounts)
(Unaudited)
March March
31, 31,
2005 2004
------------------
Revenues:
Product sales, net $21,223 $27,993
Manufacturing revenue 4,359 5,035
Royalties 12,705 11,103
Contract revenue 452 248
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Total revenues 38,739 44,379
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Costs and expenses:
Cost of product sales and manufacturing revenue 9,024 12,458
Research and development 12,942 10,772
Selling, general and administrative 13,658 12,500
Amortization of acquired intangible assets 3,339 3,358
In-process research and development -- 12,000
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Total costs and expenses 38,963 51,088
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Operating (loss) income (224) (6,709)
-------- --------
Other income (expense):
Investment income, net 1,116 11,564
Interest expense (4,957) (4,957)
Other (expense) income, net (3,230) (337)
-------- --------
(7,071) 6,270
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Loss (income) before income taxes (7,295) (439)
Income tax benefit (2,718) (5,505)
-------- --------
Net (loss) income ($4,577) $5,066
Basic (loss) earnings per common share ($0.11) $0.12
======== ========
Diluted (loss) earnings per common share ($0.11) $0.12
======== ========
Weighted average number of common shares issued and
outstanding - basic 43,490 43,368
======== ========
Weighted average number of common shares issued
and outstanding and dilutive potential common
shares outstanding 43,490 43,817
======== ========
Enzon Pharmaceuticals, Inc. and Subsidiaries
Consolidated Statements of Operations
Nine Months ended March 31, 2005 and March 31, 2004
Dollars in Thousands (except per share amounts)
(Unaudited)
March March
31, 31,
2005 2004
------------------
Revenues:
Product sales, net 75,712 80,665
Manufacturing revenue 12,335 8,826
Royalties 32,899 36,461
Contract revenue 1,163 769
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Total revenues 122,109 126,721
-------- --------
Costs and expenses:
Cost of product sales and manufacturing revenue 32,306 35,195
Research and development 31,874 24,711
Selling, general and administrative 39,630 35,187
Amortization of acquired intangible assets 10,091 10,074
In-process research and development -- 12,000
-------- --------
Total costs and expenses 113,901 117,167
-------- --------
Operating income 8,208 9,554
-------- --------
Other income (expense):
Investment income, net 2,859 12,744
Interest expense (14,871) (14,871)
Other (expense) income, net (5,173) 71
-------- --------
(17,185) (2,056)
-------- --------
(Loss) income before income taxes (8,977) 7,498
Income tax benefit (3,324) (2,691)
-------- --------
Net (loss) income ($5,653) $10,189
Basic (loss) earnings per common share ($0.13) $0.24
======== ========
Diluted (loss) earnings per common share ($0.13) $0.23
======== ========
Weighted average number of common shares issued and
outstanding - basic 43,481 43,322
======== ========
Weighted average number of common shares issued
and outstanding and dilutive potential common
shares outstanding 43,481 43,657
======== ========
Enzon Pharmaceuticals, Inc. and Subsidiaries
Consolidated Condensed Balance Sheets
March 31, 2005 and June 30, 2004
(In thousands, except share data)
March 31, June 30,
2005 2004
(Unaudited) (a)
----------- -----------
Assets
Current assets:
Cash and short-term investments $144,145 $104,651
Accounts receivable, net 20,831 25,977
Inventory 16,651 11,215
Other current assets 17,275 12,382
----------- -----------
Total current assets 198,902 154,225
Property and equipment, net 33,518 34,859
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Other assets:
Marketable securities 65,893 81,582
Other long-term assets 417,712 451,744
----------- -----------
483,605 533,326
----------- -----------
Total assets $716,025 $722,410
=========== ===========
Liabilities and Stockholders' Equity
Current and other liabilities $29,926 $33,319
Notes payable 400,000 400,000
Stockholders' equity 286,099 289,091
----------- -----------
Total liabilities and stockholders'
equity $716,025 $722,410
=========== ===========
Common shares outstanding 43,859 43,751
=========== ===========
(a) Condensed from audited financial statement
CONTACT: Enzon Pharmaceuticals, Inc.
Craig Tooman, 908-541-8759
or
Susan M. Mesco, 908-541-8777